Do you know the current value of your home? If not, it’s a good idea to check now, and make a habit of tracking it at least once a year. Even if you love your home and are set on living there for the next 5, 10, or 20 years, there are several good reasons to tabs on your property value–some of which have nothing to do with plans for relocation. Remember that your home isn’t just the place you return at the end of the day or create memories with family and friends–it’s a major component of your long-term financial fitness. Knowing how much your property is worth (as well the trend in valuation over time) can help you plan for retirement, home improvement projects, and know what amount of cash is available from a home equity line of credit at any given time.
On the other hand, if relocating and selling your home are included in your plans for upcoming years, it’s all the more important to watch the trend in your property value starting a few years in advance of when you want to sell. Why? Timing. If there is a rising demand for homes in your area, you don’t want to miss your shot at getting an exceptionally good offer for your home.
Now we’ve reviewed why it’s important to routinely check the value of your home, here are 4 methods you can use to do so.
Get a rough estimate with online resources
Of all your options to determine the value of your home, this is the fastest, most convenient, and almost always free. Many home listings and real estate agency sites will have a feature that calculates an estimate for your property value from the address of your home. While not as precise as an appraisal, for example, an online quote can provide valuable context and insight as to how your home compares to the rest of those in your zip code. In addition, it’s a great tool to monitor buying and selling trends throughout your neighborhood.
Consult a Realtor
More often than not, your local real estate agents will offer pro-bono or inexpensive assessments of your home’s value. Turns out, it’s a win-win arrangement. Select a Realtor for the valuation just as carefully as you would pick the agent who will actually list and sell your home. Incorporate online reviews, recommendations from neighbors and friends, and always meet face-to-face with agents you’re considering working with. After all, taking the time and attention to find a great Realtor at this stage will give you a leg up when you’re ready to list your home on the market–you’ll know exactly who to call. And that’s exactly what the Realtor is hoping for in exchange for assessing your property value.
Realtors will determine how much your home is worth based on what’s been selling lately in the neighborhood and for how much, taking into account the specific features and condition of your home. Also take advantage of the opportunity to get customized recommendations for renovations or improvements that’ll get the biggest boost in home value per reno dollar spent.
Gauge by (close) comparisons
If you’re curious to learn new skills, or just find it more convenient to do an independent analysis of your home value, you’re in luck! All the info you need is publicly-accessible, usually via the same online resources that provide free estimate calculators for your own home. Only with this method, you’ll use data from comparable homes (also known as “comps”) in your vicinity. First, you’ll need to identify the best comps that are as close to your home as possible–both literally (in location) and also with respect to size and features of the home.
Once you’ve identified comparable properties, figure out if any of them have sold recently and for how much. The sale price of a home is the best gauge of its actual value at that time. If none of your comps have changed hands recently, their estimated property values will always work well enough to approximate how much your own property is worth. Finally, after coming up with a rough figure for your home value, consider the specific features your home has to offer. Did you recently upgrade your kitchen with the latest high-end appliances, add on an extra bedroom, redo the bathrooms, or install energy-efficient features (windows, appliances, etc)? These can all translate to an increase in your property value over the rough estimate, especially if they set your home apart from its comps.
For a precise quote, invest in an appraisal
As part of any home sale or refinancing, a licensed appraiser will determine the value of your home through a comprehensive assessment of the property. However, even if you’re not in the process of selling or refinancing your home, you can always hire an appraiser to do a thorough evaluation of your home, inside-and-out. Appraisers will usually derive an estimate that is closest possible to what you’d receive from a buyer. They’ll typically go a step beyond your Realtor, to incorporate intangible factors in their assessment, like the layout of your home, spaciousness of the rooms, landscaping, and any unique architectural details.
The take-home on tracking your home value
No matter what method you use to determine the value of your home, there’s always some degree of subjectivity and variation between the estimate and the offer you’ll receive from a buyer or financial institution. At different times, you may have different reasons for finding out what your home is worth, and it’s perfectly reasonable to choose a different method or combination of methods to evaluate your property’s value. However, at the end of the day, it’s better to have a rough estimate than no clue of the value of your home; after all, it’s a big part of your financial health now and in the future!
Rana Khanjani, MBA
San Fernando Valley Iranian-American Real Estate Agent
Providing Services in English and Farsi
Address: 22020 Clarendon St. 200, Woodland Hills, CA 91367